NFP: Wage numbers not helpful but case for rate hike remains strong

James Knightley, Senior Economist at ING, points out that despite today’s gains below expectation in wages in the NFP report, they still forecast a March rate hike from the Federal Reserve.

Key Quotes:

“The US employment report for January showed the economy added 227,000 jobs in the month. The market was looking for a 180,000 outcome and it is also higher than the 157,000 reading seen in December so it is a positive story. There have been quite a lot of revisions to the past 12M of data but the general story remains that the US is experiencing decent growth and so the economy is creating jobs in significant numbers.”

“Wages saw a big miss. The market was looking for a 0.3%MoM/2.8%YoY outcome, but with a 0.2 percentage point downward revision to wage growth from last month and a below expectations 0.1%MoM rise this month (0.3% was the consensus forecast) we have seen annual wage growth slow to 2.5%. Again, we suspect this is a temporary slowdown with strong employment numbers ensuring that the trend is for faster wage growth in the months ahead.”

“We continue to forecast a March rate hike from the Federal Reserve. Today’s wage growth numbers are not particularly helpful, but with GDP growth on an upward trend, the economy creating significant numbers of jobs and inflation figures looking consistent with the Fed’s medium term aspirations we think the case remains strong. We think this will be followed up with an additional 25bp rate rise in 3Q17.”

Share: Feed news

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.